For generations, owning a home has been viewed as the cornerstone of the American Dream, the foundation for a happy family life and long-term financial security. Now, a new research paper challenges that conventional wisdom. Wharton's Grace Wong Bucchianeri, a professor of real estate, says her research shows that while homeowners do experience significant joy, they also face more aggravation, spend less time with friends and are even heavier than renters living in comparable homes.
Past research into the mood of homeowners showed that people felt a sense of pride and comfort in having their name on a deed. Bucchianeri argues that her research shows, however, that once the data are controlled for a range of variables, owning a home appears to deliver no more happiness than signing a monthly rent check...
Bucchianeri cautions that her research should not be used as an argument against homeownership, just as the abstract notion of the American Dream should not be used as an across-the-board endorsement for buying a home. People should balance what they are hoping to get from homeownership itself," she says. "It's really difficult, but more thinking should go into this rather than just accepting the conventional wisdom and going into homeownership by default."
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I've advocated the benefits of renting for years. Both renting and owning have their unique share of pros and cons. However, from both a financial and happiness perspective, owning a home does not bring all of the benefits conventional wisdom typically ascribes.
The advice my personal finance prof once gave me remains true: "Whether you rent or own should not be viewed as an investment decision, but rather as a lifestyle decision."
Choose the housing lifestyle that will personally bring you the most contentment, but be careful when listening to others tell you that owning a home will make you happier or that renting is like throwing your money away. Neither statement appears to be true.